Appeal Details
Counselvise Citation
[2018] 125 COUNSELVISE.COM (IT) 6419 (ITAT-INDORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 3 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-07-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Assessment Year
2013-2014
Appeal Filed On
12-04-2017
Judgement Text
ITA NOS.274 & 276/IND/2017 &CO 5 & 6/217 M/S ANMOLRATAN & CHITRA GOLD 1 | P A G E IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, HONBLE JUDICIAL MEM BER AND SHRI MANISH BORAD, HONBLE ACCOUNTANT ME MBER ITA NO. 274/IND/2017 A.Y. 2013-14 ACIT RATLAM ::: APPELLANT VS M/S ANMOL RATAN RATLAM ::: RESPONDENT CO NO. 5/IND/2018 M/S ANMOL RATAN RATLAM ::: OBJECTOR VS ACIT RATLAM ::: RESPONDENT ITA NO. 276/IND/2017 A.Y. 2014-15 ACIT RATLAM ::: APPELLANT VS CHITRA GOLD PVT. LTD. RATLAM ::: RESPONDENT CO NO. 6/IND/2018 CHITRA GOLD PVT. LTD. RATLAM ::: OBJECTOR VS ACIT RATLAM ::: RESPONDENT REVENUE BY SHRI K.G. GOYAL ASSESSEE BY SHRI S.S. DESHPANDE DATE OF HEARING 16.7 .2018 DATE OF PRONOUNCEMENT 1 9 . 7 .2018 ITA NOS.274 & 276/IND/2017 &CO 5 & 6/217 M/S ANMOLRATAN & CHITRA GOLD 2 | P A G E O R D E R PER SHRI MANISH BORAD, AM THE REVENUE HAS FILED THE ABOVE-CAPTIONED AP PEALS WHEREAS THE DIFFERENT ASSESSEES HAVE PREFERRED CROSS OBJECT ION RELATING TO THE ASSESSMENT YEARS 2013-14 AND 2014-15 AGAINST DI FFERENT ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS), UJJAIN , DATED 23.1.2017 WHICH ARE ARISING OUT OF THE ASSESSMENT O RDERS U/S 143(3) OF THE INCOME TAX ACT (IN SHORT REFERRED AS ACT) ACT FRAMED BY THE ACIT, RATLAM. 2. AS ACCEPTED BY BOTH THE PARTIES, AS THE ISSUES R AISED IN BOTH THESE APPEALS AND CROSS OBJECTIONS ARE COMMON, THES E WERE HEARD TOGETHER AND BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. FOR THE PURPOSE OF ADJUDIC ATION, WE TAKE THE FACTS FROM ITA NO. 274/IND/2017 IN THE CASE OF M/S ANMOL RATAN IN WHICH THE REVENUE HAS RAISED THE FOLLOWING GROUNDS :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.1,05,85,930/- MADE ON ACCOUNT OF UNSUBSTANTIATED CLAIM OF WASTAGE? ITA NOS.274 & 276/IND/2017 &CO 5 & 6/217 M/S ANMOLRATAN & CHITRA GOLD 3 | P A G E 3. BRIEF FACTS, AS CULLED OUT FROM RECORD, AR E THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE MANUFACTURING AND TRADING OF GOLD ORNAMENTS. INCOME OF RS.46,.15,450/- WAS DECLA RED IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2013 -14. NOTICE U/S 148 OF THE ACT WAS ISSUED ON 31.3.2016 FOLLOWED BY NOTICE U/S 143(2) AND 142(1) OF THE ACT. THE ASSESSING OFFICE R WHILE EXAMINING THE DETAILS NOTICED THAT THE ASSESSEE FIRM HAS UNDE R-DISCLOSED THE YIELD OF GOLD PRODUCTION BY 3.81% WHICH WAS QUANTIF IED AS 3395.64 GMS AGAINST THE TOTAL GOLD CONSUMPTION OF 88197.78 GMS. TO SATISFY THE ASSESSING OFFICER THE ASSESSEE GAVE DETAILED SU BMISSIONS ABOUT THE GOLDSMITHWISE DETAILS AND THE MANUFACTURING OF GOLD ORNAMENTS THROUGH THEM ALONG WITH DETAILS OF QUANTITY AND RAT E OF LABOUR CHARGES. HOWEVER, THE ASSESSING OFFICER WAS NOT SA TISFIED WITH THE SUBMISSIONS AND DID NOT ACCEPT THE WASTAGE LOSS OF GOLD OF AROUND 3.81% ON THE PREMISE THAT GOLD IS A PRECIOUS METAL WHICH IS EXTREMELY DUCTIBLE AND MALLEABLE AND THE ALLEGED CL AIM OF LOSS HAS NO SCIENTIFIC BASIS AS VERY SMALL GOLD PARTICLE AND EVEN THE DUST PRODUCED IN THE PROCESS OF MANUFACTURING IS USED BY THE GOLDSMITHS AFTER MELTING IT. THE ASSESSING OFFICER ACCORDINGLY MADE AN ADDITION OF RS.1,05,85,930/- ARRIVED AT AFTER APPLYING THE A VERAGE SALE PRICE ITA NOS.274 & 276/IND/2017 &CO 5 & 6/217 M/S ANMOLRATAN & CHITRA GOLD 4 | P A G E OF RS. 3151.02 PER GM ON THE ALLEGED EXCESS SHORTAG E OF GOLD OF 3359.64 GMS. MINOR ADDITIONS WERE ALSO MADE FOR DI SALLOWANCE U/S 40A(IA) OF THE ACT AT RS. 1,73,466/- AND DISALLOWAN CE OF DONATION OF RS.10,000/-. THE INCOME ASSESSED AT RS.1,53,84,850 /-. 4. AGAINST THE ADDITIONS, THE ASSESSEE PREFERRED A PPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND PA RTLY SUCCEEDED. 5. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGGRIEVED WITH THE DELETION OF ADDITION OF RS. 1,05,85,930/- MADE ON ACCOUNT OF UNSUBSTANTIATED CLAIM OF WASTAGE. 6. BEFORE US, THE LEARNED DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHEREAS THE LEARNED COUNSEL FOR THE ASSESSE E RELYING ON THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) SUBMITTED THAT THE ASSESSING OFFICER FAILED TO FIND ANY ERROR IN THE QUANTITATIVE RECORDS REGULARLY MAINTAINED BY THE AS SESSEE AND ALSO IGNORED THE CONSISTENCY IN THE WASTAGE DECLARED BY THE ASSESSEE IN THE PRECEDING YEARS AND ACCEPTED BY THE REVENUE. ITA NOS.274 & 276/IND/2017 &CO 5 & 6/217 M/S ANMOLRATAN & CHITRA GOLD 5 | P A G E 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE ISSUE BEFORE US RELATES TO DELETION OF ADDITION OF RS.1,05,85,930/- WHICH WAS CALCULATED B Y THE ASSESSING OFFICER BY DENYING THE CLAIM OF WASTAGE OF 3359.64 GMS WHICH OCCURRED IN THE MANUFACTURING PROCESS OF MAKING GOL D JEWELLERY. IT WAS CONTENDED BEFORE US THAT THE ASSESSEE FIRM DOES NOT MANUFACTURE GOLD ORNAMENTS AT ITS OWN BUT GETS THEM MANUFACTURED ON JOB WORK BASIS FROM GOLDSMITH (SUNA R) ON LABOUR BASIS. REGULAR SUNAR BAHI IS MAINTAINED WITH THE RE CORD OF RAW GOLD GIVEN AND GOLD ORNAMENTS MANUFACTURED AND RECEIVED BACK. ALL DETAILS INCLUDING CONFIRMATION BY EACH GOLDSMITH ST ANDS FILED ON RECORD. IT IS FURTHER SUBMITTED THAT IN CASE HIGHE R LABOUR CHARGES ARE PAID, THE WASTAGE OF GOLD IS LESS AND VICE VERS A IF LOWER LABOUR CHARGES ARE PAID. 8. WE FURTHER FIND THAT THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS) AFTER APPRECIATING THE FACTS IN DETAIL, D ELETED THE ADDITION FOR THE ALLEGED SUPPRESSION OF YIELD BY RELYING UPO N THE JUDGMENT OF HON'BLE HIGH COURT OF JAMMU & KASHMIR IN THE CASE O F ITA NOS.274 & 276/IND/2017 &CO 5 & 6/217 M/S ANMOLRATAN & CHITRA GOLD 6 | P A G E INTERNATIONAL FOREST COMPANY VS. CIT (1975) 101 ITR 721 OBSERVING AS FOLLOWS :- GROUND NO. 2,3,4 & 5 THROUGH THESE GROUNDS OF APPEAL THE APPELLANT HAS CHALLENGED THE ADDITION OF RS.1,05,85 ,930/- ON ACCOUNT OF UNSUBSTANTIATED CLAIM OF WASTAGE. THE AP PELLANT FIRM IS ENGAGED IN MANUFACTURING AND TRADING IN GOL D AND SILVER ORNAMENTS. THE APPELLANT IS MAINTAINING CASH BOOKS, LEDGER, PURCHASES AND SALE VOUCHERS. THE PURCHASES AND SALES ARE FULLY VOUCHED. THE GOLD ORNAMENTS WERE MANUFACTURED BY SUNAR ON LABOUR BASIS. THE APPELLAN T FIRM IS MAINTAINING SUNAR BAHI IN WHICH ALL THE RECORD OF R AW GOLD WERE ENTERED. IN SUNAR BAHI THE FIRM HAS MAINTAINED DETAILS OF GOLD WHICH WERE GIVEN TO VARIOUS SUNARS AND GOLD ORNAMENTS RECEIVED FROM THEM. THE PURITY OF GOLD OR NAMENTS RECEIVED IS APPROXIMATELY 92 ONLY. THE SUNAR MIXES ALLOY (KHAR) WITH PURE GOLD FOR MANUFACTURING OF GOLD ORN AMENTS. THE YIELD VARIES FROM 104 TO 108. THE AO IN THE PARA 9 OF THE ASSESSMENT ORDER MENTIO NED THAT THE PURITY OF THE JEWELLERY VARIES FROM 75 TO 91.67. THE AO ALSO MENTIONED THAT WHILE MANUFACTURING THERE IS WASTAGE IN THE FORM OF DUST AND THE DUST IS RETAINED BY KAR IGARS AND VALUE OF GOLD OF PROCESS WASTAGE IS ADJUST AGAINST THE LABOUR CHARGES TO BE PAID TO THEM. THIS CAN BE EVIDENT FRO M THAT THE APPELLANT HAS PAID DIFFERENT LABOUR CHARGES AS UNDE R :- (I) SHRI NITESH NARKAR, MUMBAI CHARGED RS.54/- PER GRAM FOR MANUFACTURING OF 13131.520 GRAM JEWELLERY RS. 7,09,102/-. (II) M/S MILAP JEWELLERS, MUMBAI CHARGED RS. 150/- PER GRAM FOR MANUFACTURING OF 1080 GRAM JEWELLERY RS. 1 ,62,0001-. THE YIELD FROM SHRI NITESH NARKAR IS 104 TO WHOM TH E APPELLANT HAS PAID RS.S4/- PER GRAM WHEREAS THE YIELD FROM MIS. MILAP JEWELLERS IS 108 TO WHOM THE APPELLANT HAS PA ID RS.LS01- PER GRAM. THE HIRE THE LABOUR CHARGES THE YIELD WIL L BE ITA NOS.274 & 276/IND/2017 &CO 5 & 6/217 M/S ANMOLRATAN & CHITRA GOLD 7 | P A G E MORE AND THE LOWER THE LABOUR CHARGES THE YIELD WIL L BE LOW. THE APPELLANT HAS FILED ALL THE DETAILS OF MANUFACT URING OF GOLD JEWELLERY AS PER SUNAR BAHI. THE APPELLANT HAS MAIN TAINED QUANTITATIVE DETAILS UNDER COMPUTER SYSTEM. MONTH W ISE PURCHASES AND SALES WITH QUANTITATIVE DETAILS HAVE BEEN FILED BEFORE THE AO. ALL THE VOUCHERS OF MANUFACTURING OF JEWELLERY FROM SUNAR HAVE BEEN FILED AND COMPARATIVE DETAILS OF OTHER DEALERS ARE ALSO FILED. THE A.O. FAILED TO BRING ON RECORD ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNT OF THE APPELLANT. THE AO MUST REFER THE DEFECTS IN BOOKS OF ACCOUNT A ND RECORD A CLEAR FINDING THAT BOOKS OF ACCOUNT IS NOT CORREC T. ARBITRARY REASON CANNOT FORM THE BASIS FOR REJECTING THE BOOK S OF ACCOUNT OF THE APPELLANT. THEREFORE, THE AO'S CONCL USION THAT BOOKS OF ACCOUNT ARE DEFECTIVE IS NOT CORRECT. THE AO HAS NOT BROUGHT OUT ANY MATERIAL ON RECORD WHICH SUGGESTS T HAT THE APPELLANT'S YIELD IS 08. IN THE CASE OF INTERNATIONAL FOREST CO. VS. CIT (1975) 10 LTR 721 (J&K) IT IS HELD THAT AO CANNOT PROCEED TO MAKE AN ARBITRARY ADDITION AND BASE HIS CONCLUSION PURELY ON GUESS WORK. HE OUGHT TO HAVE RELATED HIS ESTIMATE TO SOME EVIDENCE OR MATERIAL ON THE RE CORD AS IT IS NOT WELL SETTLED THAT IF THE PROFITS SHOWN BY THE A PPELLANT IN HIS RETURN ARE NOT ACCEPTED IT IS FOR THE TAXING AU THORITIES TO PROVE THAT THE APPELLANT HAS MADE MORE PROFITS THAN RETURNED. HERE THE AO FAILED TO BRING ON RECORD ANYTHING WHIC H SHOWS THAT APPELLANT HAS EARNED MORE PROFIT THAN DISCLOSE D IN THE BOOKS OF ACCOUNTS. THE AO HAS NOT MADE ANY ENQUIRY AND ARBITRARILY MADE THE ADDITION. THE APPELLANT HAS DISCLOSED THE YIELD OF 105.28 IN THE PAST AND THE SAME HAS BEEN ACCEPTED BY THE DEPARTME NT. DURING THE YEAR UNDER CONSIDERATION THE APPELLANT H AS DISCLOSED YIELD OF 105.29. THEREFORE, THE AO IS NOT JUSTIFIED IN MAKING THE ADDITION ON ACCOUNT OF SUPPRESSION OF TH E YIELD. THEREFORE, THE ADDITION MADE BY THE AO AMOUNTING TO RS.1,05,85,936/- IS DELETED . THE APPEAL ON THESE GROUNDS IS ALLOWED . ITA NOS.274 & 276/IND/2017 &CO 5 & 6/217 M/S ANMOLRATAN & CHITRA GOLD 8 | P A G E IT IS ALSO NOTICED THAT THE ASSESSEE HAS FURNISHED QUANTITATIVE DETAILS OF EACH GRAM OF RAW GOLD ISSUED TO GOLDSMIT HS FOR GETTING GOLD ORNAMENTS MANUFACTURED. THE CONFIRMATION LETTE RS AND LEDGER ACCOUNT COPIES OF THE GOLDSMITHS HAVE ALSO BEEN FIL ED. THE ASSESSING OFFICER HAS BEEN UNABLE TO POINT OUT ANY MISTAKE IN THESE RECORDS. THE BOOKS OF ACCOUNTS ARE AUDITED AND QUA NTITATIVE DETAILS ARE CERTIFIED BY THE AUDITORS. THE ASSESSING OFFICE R HAS NOT REJECTED THE BOOKS OF ACCOUNTS BEFORE MAKING SUCH AD HOC ADD ITION THAT TOO WITHOUT BRINGING ANY CLINCHING EVIDENCE AGAINST THE ASSESSEE. THIS FACT IS ALSO NOT DISPUTED THAT IN THE PRECEDING YEA RS ALSO THE ASSESSEE HAS CLAIMED SIMILAR TYPE OF WASTAGE OF ALM OST AROUND SAME PER CENTAGE WHICH HAS BEEN ACCEPTED BY THE REV ENUE AUTHORITIES ALSO. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE FIND NO REASON TO MAKE ANY INTERFERENCE WITH THE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND ACCORDINGLY UPHOLD THE SAME. THE GROUND OF THE REVE NUE IS ACCORDINGLY DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ITA NOS.274 & 276/IND/2017 &CO 5 & 6/217 M/S ANMOLRATAN & CHITRA GOLD 9 | P A G E 7. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE REQUESTED FOR NOT PRESSING CROSS OBJECTION. THE SAM E IS, THEREFORE, DISMISSED AS NOT PRESSED. 8. NOW WE WOULD LIKE TO DEAL WITH ITA NO. 276/IND /2017 IN THE CASE OF ACIT VS. M/S CHITRA GOLD PRIVATE LIMITED WH EREIN SIMILAR ISSUE HAS BEEN RAISED BY THE REVENUE. AS MENTIONED ABOVE, BOTH THE PARTIES HAVE ACCEPTED THAT THE ISSUES AND FACTS OF THE PRESENT CASE REMAIN THE SAME AND THE NATURE OF BUSINESS AND ADDI TION MADE BY THE ASSESSING OFFICER IS ALSO SAME. WE, THEREFORE, FOR THE DETAILED FINDINGS GIVEN ABOVE BY US WHILE DEALING WITH ITA N O. 274/IND/2017 AND CO NO. 5/IND/2017, APPLY OUR DEC ISION TO THIS APPEAL AND DISMISS THE APPEAL OF THE REVENUE AND AL SO DISMISS THE CROSS OBJECTION AS NOT PRESSED. 9. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AN D CROSS OBJECTIONS OF THE ASSESSEES STAND DISMISSED. PRONOUNCED IN OPEN COURT ON 19 JULY, 2018. SD/- SD/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER ITA NOS.274 & 276/IND/2017 &CO 5 & 6/217 M/S ANMOLRATAN & CHITRA GOLD 10 | P A G E 19 JULY, 2018 DN/- COPY TO APPELLANT/RESPODENT/PR.CIT/CIT(A)/DR/GUAR D FILE BY ORDER PRIVATE SECRETARY
Mehul